Uber loses $3 billion on Didi after China’s action

Since pulling off one of the biggest US stock market debuts of the past decade, Didi’s US-traded shares are down 41% as Chinese regulators put the app online in its home market, citing privacy and security risks. Ordered to be removed from store. The value of Uber’s roughly 12% stake in its former rival has been slashed from $7.3 billion to about $4 billion at the end of the third quarter, according to Bloomberg calculations.

Didi is still the most valuable equity stake in Uber’s portfolio of investments, valued at about $15 billion at the end of the second quarter. It wasn’t even the last to go public. In July, online food delivery startup Zomato Ltd. listed its shares in India, which were valued at 910 million rupees ($12.2 billion). The IPO at the end of the second quarter raised the value of Uber’s 9% stake from $100 million to $1 billion.

Although the ups and downs in Didi and Zomato are only paper gains and losses, Uber’s other stakes, including Grab Holdings Inc., Aurora and Joby Aviation LLC, have also moved to go public and provide more funding for Uber’s finances. can cause instability.

When the San Francisco-based company reports financial results on Thursday, investors can kick off the big Didi writedown and focus on Uber’s business prospects. “There’s going to be more intrigue about the relative growth rate of driver supply and ridership,” said Brad Erickson, analyst at RBC Capital Markets.

Ride-hailing was one of the hardest-hit areas during the pandemic as people gave up on activities that involved close proximity to strangers. But rider demand is rising again with rising vaccination rates and the reopening of the economy. Lyft Inc. reported its financial results earlier this week, reporting a 73% increase in revenue in the third quarter. The company said it was seeing an increase in airport rides and weekend and evening trips – a sign that customers are resuming their pre-pandemic habits.

At Uber, gross bookings are expected to reach $23.3 billion in the third quarter, with ride-hailing rising to $10.1 billion, narrowing the booking gap from food delivery orders that hit rides at the start of the pandemic. Sales left behind.

According to average analyst estimates compiled by Bloomberg, revenue is estimated to be $4.4 billion.

Analysts estimate revenue of $2.1 billion from rides and $1.9 billion from deliveries, which includes Uber Eats. If Uber lives up to expectations, it will be the first time since the onset of Covid-19 that ride-shares comprise the majority of its total revenue.

Uber is still losing money on delivery orders, and a rebound in the high-margin ride-hailing segment will help it move closer to achieving profitability. Analysts expect a loss before interest, taxes and other expenses of $15.4 million. The company raised its forecast in September, indicating that adjusted profit would range from a loss of $25 million to a profit of $25 million.

However, even at the high end of its estimate, Uber still lags behind Lyft, which on Tuesday reported an adjusted profit of $67.3 million.

This story has been published without modification in text from a wire agency feed. Only the title has been changed.